A mixed-use development at 1270 Columbia St. in downtown San Diego is being planned for a local record-size 47-story tower with hotel and residential components, as well as a possible timeshare.
San Diego-based Chhatrala Group, with offices on Rosecrans Street in the Sports Arena area has acquired a 25,000-square-foot parcel (parcel numbers 533-404-01&07) on the block bounded by Columbia, India and A streets.
The hotel investor/developer, through its Columbia Downtown LLC, has paid $10.1 million for the property currently occupied by a parking lot operated by Five Star Parking. The LLC took out a $5.1 million loan from San Diego National Bank to finance the transaction.
The seller was Bay Structures LLC, c/o Alger Development of Tacoma, Wash. Halston Mickhail and Kevin Bral are the executive managers of Bay Structures.
The transaction was handled by Tim Winslow, Josh Vasbinder and Jason Kimmel of Grubb & Ellis|BRE Commercial.
Hemant Chhatrala, Chhatrala Group's president, said the site had been considered for a 23-story residential tower, but that the project was never able to get out of the ground.
This tower, which does not yet have a formal name, would be the tallest project in the city, at roughly 500 feet.
The mixed-use tower is being planned for 364 hotel rooms, about 85 of which could be extended-stay suites and some possible timeshares; a hotel pool and spa; at least two restaurants; and approximately 65 luxury condominiums to be constructed between the 28th to the 47th floors of the complex.
The project is being designed by C.W. Kim Architects & Planners of San Diego, who also designed Emerald Plaza.
"Emerald Plaza is a landmark for San Diego and we're hoping for the same thing here," Chhatrala said.
Jenish Patel, Chhatrala chief operating officer, said these condominiums will each have private access from the elevators and large balconies.
The floor plans will range from 1,380 square feet with two bedrooms in most of the units to 5,500 square feet for the penthouses.
The duplex in three-bedroom configurations will have 4,500 square feet with private pools and spas on the deck.
The three penthouses, which will be built on three levels of the tower, will also have the private pools and spas, but will feature four-bedroom units in 5,500 square feet.
"All will have an ocean view," Chhatrala said.
"These will have very high-end luxury finishes," Patel added.
A 6,500-square-foot space at the top of the building will feature a jogging track, theater, two outdoor barbecue areas and a lounge.
Because the project is at the beginning of the planning stage and Centre City Development Corp. staff are reviewing the plans now, it is impossible to say what will be the final cost, according to Chhatrala. He said it is likely to be in the $150 million to $200 million range, however.
If all goes as Chhatrala would hope, ground could be broken for the building within the next 18 months, and the project could then be completed by 2011.
Lining up financing is also in the early stages. Chhatrala said he expects the lending package will likely be a joint venture of private financing and more conventional lenders.
Robert Rauch of R.A. Rauch & Associates, a consultant and developer of a Homewood Suites and a soon-to-be completed Hilton Garden Inn in the Torrey Hills area, said the good news for Chhatrala is that conventional financing is still plentiful.
This is in spite of the fact of a perceived glut of rooms coming on line.
"Lenders think in terms of what happened yesterday," Rauch said before adding that it will likely be 2009 "until reality sets in" and the financing spigot is shut off.
Rauch said if he were borrowing for such a project as Chhatrala's today, he might consider a 75 percent construction "mini-perm" loan that could have to be paid off within three to five years.
"That way, you're done with it," Rauch said.
Even with ready money, this is no guarantee of success. Rauch notes that a hotel must have a strong and a suitable brand for the area. He said this hotel will have to compete with the W Hotel, the luxury venue about a block away.
Rauch said brands such as Homewood Suites and Hilton Garden Inn might be ideal at this location, but there are others like Marriott Courtyard and Marriott Residence Inn that might fare equally as well.
Rauch suggested Chhatrala wouldn't only benefit from a strong brand but occupancy rates that are over 70 percent in downtown San Diego.
He expects those rates to come down to about 70 percent when the latest wave of new rooms comes on line about two years from now, but added that the figure is still high when compared to most cities.
The mixed-use tower will be the first job on this scale for Chhatrala. The firm is better known for acquiring, rather than building its hotels.
The firm has owned Comfort Inns, Ramada Inns, EconoLodges and Days Inns throughout San Diego County.
Chhatrala has owned lodgings throughout the rest of California, Arizona, Chicago and Florida.
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